Britain’s economy grew far slower than expected in the first quarter of 2015, official data showed Tuesday, delivering a blow to the government just nine days before a general election.
Gross domestic product expanded by 0.3 percent between January and March compared with 0.6 percent in the final quarter of 2014, the Office for National Statistics (ONS) said in an initial estimate.
GDP is the last major piece of data on the economy before Britain votes in a knife-edge election next week.
Opinion polls show Prime Minister David Cameron’s centre-right Conservatives neck and neck with the main centre-left opposition Labour Party, which is led by Ed Miliband.
As neither is expected to win an outright majority in the election, they will likely have to team up with one or more smaller parties in order to govern, such as the Scottish National Party (SNP).
Cameron insisted the slowdown underlined the need to stick with the government’s economic plan.
“They show that we cannot take recovery for granted, we can’t take our growth for granted,” the premier said on the campaign trail at a factory in North London.
“While you see insecurity and instability all over the world causing us difficulties, don’t vote for instability here in Britain.”
But Labour’s top finance official Ed Balls countered: “While the Tories have spent months patting themselves on the back, these figures show they have not fixed the economy for working families.”
– All about the economy –
The state of Britain’s economy is in sharp focus ahead of the general election, with Labour arguing that the ruling coalition’s painful austerity measures since coming to power in 2010 have hurt the poor.
But the Conservatives and junior coalition partners Liberal Democrats are hoping to capitalise on their stewardship of the economy, which has staged a solid recovery since 2010 despite Tuesday’s shock data.
“Given that the Conservatives and Liberal Democrats are hoping that many undecided voters will ultimately decide to vote for them due to their management of the economy, this marked slowdown in growth is particularly unwelcome,” said Howard Archer, chief UK economist at consultants IHS Global Insight.
“However, the Conservatives and Liberal Democrats can probably argue with some justification that increased uncertainty ahead of the general election has hampered growth, likely leading to business caution, particularly on investment. They can also point to still relatively decent year-on-year GDP growth of 2.4 percent in the first quarter.”
Analysts’ consensus had been for a slowdown in quarter-on-quarter growth to only 0.5 percent in the first three months of 2015, according to Bloomberg News.
“With the election just days away, the news that the UK’s economic recovery slowed sharply in the first quarter clearly won’t help the coalition parties, but this slowdown should just be temporary,” said Vicky Redwood, chief UK economist at Capital Economics research group.
“Households’ real incomes are still on track for their strongest growth this year since 2006. And the business surveys remain upbeat and consistent with quarterly GDP growth returning to 0.7 percent or 0.8 percent quarterly rates soon,” she added.
The ONS said that services growth slowed to 0.5 percent in the first quarter, while the other three main industrial groupings in the economy contracted, with construction falling by 1.6 percent, production by 0.1 percent and agriculture by 0.2 percent.